Lee Hower presents a balanced writeup of Airbnb’s prospects as an investment in advance of its IPO this coming week.

I too was underwhelmed by Airbnb’s growth (prior to the pandemic in 2019) and profitability. As an online platform that facilitates millions of transactions between supply and demand, you would think they earned higher margins.

The key line in my opinion: “travel is a category where you’re competing for a consumer’s business each time they book a trip.” Thus, despite their strong brand, Airbnb will likely have to continue spending significantly on marketing (a major drag on long term profitability).